AN ASSEMBLY Member has called for a full investigation into public funds provided to a company that failed to pay its employees the salaries they were due.

AN ASSEMBLY Member has called for a full investigation into public funds provided to a company that failed to pay its employees the salaries they were due.

Monmouth AM David Davies has taken up the issue of payments to Pedagog Ltd, a hi-tech company based at Risca, near Newport, after he was contacted by a constituent who used to work for the firm.

The managing director of the firm concerned said the wages had been unpaid because of a "cash flow" problem.

The constituent, Martin Lewis, told The Western Mail he was taking Pedagog to an Employment Tribunal to recover several thousand pounds that is owed to him.

He said, "I contacted David Davies because of my serious concerns about public money paid to Pedagog, which has received both Regional Selective Assistance (RSA) money via the Welsh Assembly and cash from Finance Wales, the investment arm of the WDA.

"I was Pedagog's product manager, but left the company in December after a period when not all the money contractually owed to me was paid. I think it is very disturbing that public money should be put into a company that does not honour its commitments to employees and believe Mr Davies is right to call for an investigation. I would be pleased to tell the inquiry all I know."

Mr Davies said, "Large amounts of public money have been paid to Pedagog and I find it worrying that the company has not been able to pay Mr Lewis the money he is owed. We need to be satisfied that the public money allocated to Pedagog has not been wasted. I shall be calling for a full investigation by the Assembly's economic development committee into payments made to Pedagog."

Pedagog's managing director is Dr Olinga Ta'eed, who is also one of Mr Davies's constituents. Born in Laos to Iranian parents, Dr Ta'eed describes himself as a venture capitalist.

Last month, another company that he was a director of, Technology Concepts Ltd (TCL) went into liquidation. TCL, which operated from Ebbw Vale, employed around 20 people and folded owing almost £500,000 to Finance Wales.

A third company of which Dr Ta'eed was a director, Shawley Ltd, has also gone into liquidation, although its assets have been sold on.

Dr Ta'eed said, "Pedagog received RSA totalling £188,000 in December 2002 and Finance Wales has provided investment of £500,000. They are extremely happy with what we are doing and in 2006 they will get an enormous return.

"This is a high risk, venture capital company, and it is often the case that it takes time for customers to pay up. The reason why we were unable to pay employees all they were owed is because of cash flow problems. Mr Lewis is the only one still owed money and I will pay him.

"I am very confident about the future of Pedagog. We have just put together an investment package of £530,000, and I am putting in a further £182,000 of my own."

Dr Ta'eed said Finance Wales' investment in TCL preceded his involvement with the company.

A spokesman for the WDA said, "Finance Wales was owed £497,000 by TCL when the company went into liquidation in February. Finance Wales invested in TCL alongside private sector partners to assist the company's strategy to develop advanced new data communications products. It is uncertain whether any of this investment will be recovered from the liquidators of the company.

"As far as Pedagog is concerned, Finance Wales followed a consortium of private sector investors in facilitating a £1m investment in 2002. Both these investments were made because the companies offered an opportunity to back the creation in Wales of new hi-technology products.

"Normal commercial and financial due diligence were conducted on both companies to support the investment decision. These, and all other similar investments, are made after an appraisal of the risks entailed. Finance Wales (and its private sector partners) concluded that the risks were worth taking.

"One of the main reasons why Finance Wales was created was to provide risk capital to new, innovative ventures to benefit the Welsh economy. It's inevitable that a significant proportion of early stage investments - such as TCL - will fail."